p2pnet.net News:- Today was the day a Russian p2p site came in out of the cold for a full frontal confrontation with the US, with the members of the Big Four Organized Music cartel in the background.

“I have a hard time imagining Russia becoming a member of the WTO and having a Web site like that up and running that is so clearly a violation of everyone’s intellectual property rights,” said US Trade Representative Susan Schwab, recently.

She was referring to Mediaservices’ AllofMP3.com and her remarks came as the US and Russia were haggling over Moscow’s, “13-year-old bid to join the WTO,” as Reuters put it. “Those talks failed in July, primarily because of agricultural issues and U.S. concerns that Russia was not doing enough to stop piracy and counterfeiting of American goods.”

Then in a statement, AllofMP3.com accused Schwab of, “completely and deliberately” mischaracterizing it and furthermore said, “it is irresponsible to use AllofMP3.com as a negotiating instrument in an attempt to extract concessions from Russia in return for U.S. support for accession to the World Trade Organization.”

Vivendi Universal, Warner Music, Sony BMG and EMI claim the company is, “part of a campaign to secure a more favorable royalty structure,” says another press release.

Those companies and their agents, the British Phonographic Industry (BPI) and Recording Industry Association of America (RIAA) have enlisted the British and U.S. governments as part of their business campaign.

Mediaservices is convinced that its business model is legitimate and that it maximizes demand for music and spurs consumers to buy more music. The company believes that everyone wins – record labels, artists and distribution companies – when the market is broader and deeper. Relying on a handful of artists for the majority of sales is an outdated business model and recipe for disaster for the music industry.

Today, in one of the first reports on the conference, “Bloggers were not invited, but being a journalist by trade I did manage to get my foot in the door,” posted JankO on P2P Blog, going on:

First of all, Hollywood can relax. Allofmp3 is not thinking about offering video, or any onher digital products beside music for that matter. Allofmp3 gave also a bit of insight into the inner workings of the company. They told us they have a small team of engineers that does most of the work on the site – including the development of the online encoding process, for which Allofmp3 claims to own patents.

Allofmp3 didn’t go into much details about the recent changes in Russia’s copyright law. They acknowledged that authors can now exclude their works from collective licensing – but said that none of them have done so yet. Maybe because there is no easy way to opt out and no information about this process on the Allofmp3 website.

They also didn’t completely rule out using DRM in the future, but don’t seem to have any immediate plans to abandon the MP3 format either.

Speaking of future: Allofmp3 seems to evision dealing with artists directly in the future as record labels are becoming less and less important. Their own philosophy of the music business reads like this:

Let’s start with the fact that the record companies have little regard for the majority of musicians. They are concerned with making money for themselves, not the artists. In our opinion, we and the artists would be better off dealing directly with each other. In fact, we believe that is the future of the music industry. We think labels will fade, not disappear but fade, and that artists will have much greater freedom to actually control their work, which they don’t the minute they sign their contract.

And in another early post, “To AllofMP3, the entire mess is the fault of the music labels, which have taken advantage of artists for years,” says Ars Technica’s Nate Anderson, quoting company director general Vadim Mamotin as saying:

The record companies have little regard for the majority of musicians. They are concerned with making money for themselves, not the artists. In our opinion, we and the artists would be better off dealing directly with each other. In fact, we believe that is the future of the music industry. We think labels will fade, not disappear but fade, and that artists will have much greater freedom to actually control their work, which they don’t the minute they sign their contract.”

“The irony of that statement is delicious,” says Anderson. “Artists should have ‘greater freedom to actually control their work,”‘ so AllofMP3 ripped their music without asking said artists and offered it for sale to the world at a Russian price point. Artists are no doubt thrilled at this level of ‘control’.

“Users like it, though. The combination of low prices, quick servers, and high-bit rate (though transcoded) downloads on the newest music makes the site attractive, no matter what its legal status. The lack of DRM doesn’t hurt, either.”

Slyck’s Tom Mennecke also tuned in, posting:

Although AllofMP3 previously hinted at working out an arrangement with the entertainment industry, the tone of the press conference was notably defiant. AllofMP3 refuted any claims of illegality, and repeatedly stated their operation was compliant with Russian law. They also state that all royalty payments, or 15% of AllofMP3’s revenue, are delivered to ROMs.

ROMs (Russian Organization for Multimedia and digital Systems) licenses online stores, and, according to AllofMP3, collect royalty payments. These payments are then theoretically distributed to copyright holders.

The entertainment industry however refutes this claim. The RIAA and IFPI have repeatedly stated they have yet to see any payments from AllofMP3, or from ROMs.

During the press conference, AllofMP3 insisted that all lawful payments have been made. If this is the case however, why hasn’t the entertainment industry seen it?

That very question was asked numerous times. However, AllofMP3’s answer was consistent – they are not responsible for payments once ROMs collects the royalties.

We can’t control what ROMS does. However, we want to be very clear that we have encouraged ROMS to distribute the royalties. Clearly, it is in our best interest, as well as the musicians, that ROMS distribute the royalties to the record companies.

We can’t control what ROMS does. However, we want to be very clear that we have encouraged ROMS to distribute the royalties. Clearly, it is in our best interest, as well as the musicians, that ROMS distribute the royalties to the record companies.

Meanwhile, AllofMP3.com is, “a Russian business that is in complete compliance with Russian law,” it insists, adding:

“The company has a licensing agreement to sell music online and pays royalties to the Russian Organization for Multimedia and Digital Systems (ROMS). That entity is the national Russian organization that supports the interests of rights holders, whose work is used in digital interactive networks including the Internet. In its capacity, ROMS oversees licensing agreements and collects royalties and pays them out to copyright holders.”

Its download prices are based on file size rather than item which means music typically comes in at somewhere between $.15 to $.25 per downoad, obviously significantly less than the $1 and up demanded by the corporate sites.

Also See:
clearly a violation – US mugs AllofMP3.com, October 5, 2006
statement – Mediaservices Defends AllofMP3.com, October 5, 2006
press release – Russian Company AllofMP3 Will Address Online Music Distribution Issues and Piracy Charges on Oct. 17, October 16, 2006
P2P Blog – Allofmp3: We will survive, October 17, 2006
Slyck – RIAA asks AllofMP3 to Come Clean…, October 17, 2006

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